Are economic growth and well-being compatible? Welfare reform and life satisfaction in Japan

Abstract

Whether economic growth improves the human lot is a matter of conditions. We focus on Japan, a country which shifted in the 1990s from a pattern of rampant economic growth and stagnant well-being, to one of modest growth and increasing well-being. We discuss concurrent policy reforms and analyse the changes in well-being. In particular, we assess whether the correlates of the increase in well-being are consistent with those expected from the reforms. We apply Blinder–Oaxaca decomposition to World Values Survey data. Results show that improved conditions for the elderly, parents and women, that is the primary groups targeted by the reforms, correlate with well-being increases. This evidence is consistent with the hypothesis that social safety nets can make economic growth compatible with sustained increases in well-being.